ACCOUNTING STANDARDS IN CHINA

Accounting Standards in China

Accounting Standards in China

Current Accounting Standards in China

The year 2007 proved to be a very productive year for China because of its continuing integration of world trade and capital markets and the implementation of the accounting standards mentioned in International Accounting Standards Board (IASB). Old Chinese Accounting Standards (CAS) was replaced by the International Financial Reporting Standards (IFRS), to bring China in line with rest of the world. The new accounting procedures which became the law on 1st January 2007 sparked lot of debates and discussions in the country. The Ministry of Finance held discussions with the top firms of the country for successfully implementing the new accounting system. (www.iasplus.com)

There was a need for China to update its business practices and accounting system in order to maintain its position as a key player in the foreign investment market. The old accounting practices gave lot of difficulties to the foreign investors who were operating in China because it did not provide the clear picture of the company's financial position. The current accounting standards of IASB will help China in developing its strong relationship with foreign companies because of its international recognition. However, the efforts of China to adopt the new accounting standards in one go were not an appropriate action. The Chinese economists are working on the proper adoption of IASB standards but the complete removal of the old accounting standards looks impossible. Initially, local companies faced problems in adjusting with the new accounting standards but now they have adjusted themselves with IASB. The difference between the IASB and FASB 141 is the difference in the presentation and the additional details that IASB provides in their accounting contents. FASB 141 covers the whole financial statements but they do not provide the details of accounting entries. ...